Finance of America is shutting down its wholesale operations amid heavy losses and a wave of competitors also pulling back from the space.
The company’s mortgage division will stop funding and purchasing brokered or correspondent loans through its wholesale and non-delegated channels on Dec. 16, it said in a memo Friday to business partners reviewed by National Mortgage News. It stopped accepting new floating loans and forward mortgage locks last Friday evening.
The lender also set an Oct. 28 deadline to either lock loans currently in its pipeline or submit a credit package on previously locked loans. Its commercial and reverse lending operations won’t be impacted by the move, the memo said.
The move comes two months after Finance of America reported a net loss of $168 million in the second quarter and announced expense reductions including layoffs to save the firm over $100 million this year. The company in August also said it would depart its consumer-direct channel, which heavily relied on refinance activity which cratered this year.
Finance of America is also reportedly shopping its forward retail channel. A deal with Guaranteed Rate for the operations fell through last week, HousingWire reported.
“It is company policy not to comment on rumors or speculation in the market,” said a spokesperson for Finance of America.
A representative for Guaranteed Rate Tuesday declined to comment on the alleged negotiations.
Finance of America’s mortgage division, which includes home improvement loans, reported a net loss of $21 million in the second quarter. Its speciality finance and services segment, including reverse mortgages, commercial and other lender services, posted a $1 million loss over the same period.
The home improvement line reported its highest funding months ever in June and July and was poised to break even over the summer, president and interim CEO Graham Fleming said in August. He also said the firm’s mortgage servicing rights advisory services had a record quarter. Meanwhile, its reverse mortgage operations saw home equity conversion mortgage endorsements fall 44.3% from August to September.
Exits from the wholesale segment have ramped up in recent months while the space’s largest players have engaged in aggressive pricing. LoanDepot said it would fund its $1 billion wholesale pipeline by the end of this month, while AmeriSave Mortgage Corp. and Mountain West Financial have already laid off employees in similar moves. Guaranteed Rate in the spring shuttered its Stearns Lending wholesale channel.
Homepoint, which announced competitive conforming conventional loan pricing in August, will also cut almost 1,000 employees in November, according to Worker Adjustment and Retraining Notifications filed in multiple states. The company isn’t likely to make another reduction, Phil Shoemaker, president of originations at Homepoint, told National Mortgage News last week.